Clandestine removal allegations fail where seized documents and statements lack independent corroboration and clear linkage to the assessee.

Clandestine removal of stainless steel ingots was not established where the demand was based only on seized papers from a director's residence and investigation statements. The documents did not clearly identify the product, did not reliably link the entries to the appellant company, and were unsupported by independent corroboration or verification. The material also failed to prove unaccounted clearances or receipt of sale proceeds attributable to the appellant. On that evidentiary basis, the duty demand and penalties were held unsustainable and were set aside.

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Issues: Whether the demand of duty and penalties for alleged clandestine removal of stainless steel ingots could be sustained on the basis of seized documents and statements recovered during investigation.

Analysis: The demand rested on documents recovered from the residential premises of a director and on statements recorded during investigation. The same material had already been examined in a connected matter involving the group concern, where it was held that the documents and statements, without further verification or independent corroboration, were insufficient to establish clandestine manufacture and clearance. The seized papers did not identify the product or clearly link the entries to the appellant company, and the evidence did not establish that the figures represented unaccounted clearances attributable to the appellant. The reasoning also showed that the department had not brought reliable material to prove actual clandestine removal or the receipt of sale proceeds.

Conclusion: The duty demand and penalties were not sustainable and were set aside.

Concurring Opinion: Justice Rakesh Kumar agreed with the result and emphasized that the seized documents were vague, did not clearly identify whether they belonged to the appellant or the group company, and could not by themselves justify treating all entries as unaccounted production and clearance.

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